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Defining the New World
The economic downturn of 2009 was a game changer for many - individuals and businesses alike. We're now adjusting to the new world created by those changes. Read on for new insights uncovered by The NPD Group's Retail and Brand Landscape Series and The Economy Tracker.
In the Midst of a "He-cession"?
Among households with children, men’s purchases seem to have been the first line cut from the family budget during the past year. The NPD Group’s Consumer Tracking Service shows that among households with a husband, wife, and child, the allocation of household spending for men’s apparel declined the most from 2008 to 2009, as a percent of total spend and in average price paid. With higher and faster-growing unemployment rates than women, men have been disproportionately influenced by the U.S. economic downturn – some call it a “he-cession.”
Share of Household Apparel Spending and Average Price Paid for
Men’s, Women’s and Children’s Sportswear in Married Households with Children
2008 to 2009
Value is Still More Important Than Price
Value is defined as what a consumer gets for what he or she gives. While price is important, a great price on something the consumer doesn’t want means nothing. However, a great price on exactly what the consumer wants can justify a purchase.
“The key is giving the consumer permission to buy,” said Dee Warmath, The NPD Group’s vice president, global product innovation. “This permission comes from satisfying a balanced value equation where the consumer trades off quality, ease of shopping, and brand names he or she wants with affordability and sales and deals. If price is dominating your thinking today, you should think again – your consumer is.”
For consumers, affordability and sales and deals are two factors that drive perceptions of price. Affordability is whether the consumer can pay the price, while “sales and deals” speaks to whether the consumer can get access to “more or better” because of the special offer.
The following chart illustrates how consumers' mindsets have shifted from just being able to afford a purchase to really looking for value in that purchase. For today's consumer, it's no longer about how much will this cost me, but rather how much can I get for my investment?
Sales and Deals More Important in 2010
Change in relative importance of affordability and sales and deals to overall price perceptions
2009 to 2010
There Isn’t ONE “New Normal”
It’s clear that different consumers have experienced the recession and the recovery in different ways. Job security, change in personal wealth, and individual life stage all played into how hard each consumer was hit over the past year. The key to being relevant today is in understanding how your consumer experienced the recession.
For example, the following chart illustrates differences between the recession experience of 45- to 54-year-old and 25- to 34-year-old U.S. consumers.
For those ages 25 to 34, spending is recovering somewhat with their attitudes. For the 45 to 54 year old, spending is recovering despite their continued concerns. The message that will resonate with the younger age group is not the same as the message required to be relevant to the older age group.
"U.S. consumers are beginning to emerge from the economic circumstances of 2009, some faster than others," Warmath observed. "While companies should respect the effects of last year’s experiences, in many ways consumers are just ready to get on with things. Having a real appreciation of what those experiences have been will be key to staying relevant to your consumer going forward."
Do you understand the new normal for your consumer?
For more information about NPD’s Retail and Brand Landscape Report Series or The Economy Tracker Product Suite, contact Charlie Camaroto at 866-444-1411 or email (contactnpd@npd.com).
